Something fishy at the GSSC?

Responsibility for the Gauteng Online project, which is intended to get the schools online, was handed to the Gauteng Shared Services Centre (GSSC) last year. Both Gauteng Online and the GSSC have come under unfavourable scrutiny in the past - GautengOnline because the project foundered without achieving much success for several years; and the GSSC because of allegations of impropriety.

GSSC pleads efficiency

The latest allegations against the admin hub relate to the speed with which the GautengOnline deal was awarded and the fact that one person has a shareholding in three of the companies that make up the winning consortium - a relatively unknown group named SMMT Online.

The GSSC has denied all allegations, saying it is merely being efficient. It also says it sees nothing wrong with the fact that one person has significant shareholding in three of the companies in the winning consortium.

The deal in question

The GautengOnline school project previously fell within the ambit of the provincial department of education. It was first announced in 2001, when it was allocated R500 million over three years. It failed to meet its deadlines and was handed over to the GSSC last year. At the time of being handed over, the project value was just under R1 billion.

Even though some work had been done under the project by last year, with about 1 000 schools being fitted out with computer laboratories, not all these schools were online yet and about another 1 000 schools remained completely cut off from the digital world.

The GSSC therefore decided to re-advertise the project under one massive bid worth about R2 billion rand. The tender was issued on 31 August last year and awarded on 18 December - less than four months later.

Suspect processes

A source close to the deal - who asked to stay anonymous but was not one of the bidders - said the entire process was suspect.

"The whole thing was done quick, quick, quick," he said. "If you look at the magnitude of the tender and the timeframe within which it was awarded, there has to be question about the decision."

He said that "the manner in which it [the tender] was executed is very worrying - there are basic administrative things [such as the time needed for the evaluation of bidders] that were not right". He did not specify what administrative processes were questionable.

A financial commentator, who cannot be named, says the fact that parties had to put together their tenders in a matter of weeks is very dubious. "To not only put together a tender but also a whole consortium in 21 days would be incredibly difficult, if not canned," he says.

He says it is very rare for government tenders to be awarded in the kind of time frame in which the GSSC awarded the GautengOnline tender. "From the time you look at the tender for the first time to when it was awarded...it certainly creates question marks."

Khusela Sangoni, head of communications at the GSSC, has vehemently denied any irregularities, saying that the GSSC`s internal guidelines set a timeframe of 60 days for all tenders to be awarded.

"The panel that decided on the tender was made up of members of the GSSC, the provincial department of education, and functional matter experts," she says. "Why do people question the process rather than commend us on our efficiency?"

She continued, "We do not know what is meant with `rushed through`. We are satisfied that this [tender] was processed well within the stipulated time."

Key areas

The tender board focused on five main areas in awarding the tender, namely connectivity; management of solutions and its components; innovative nature of solution and financial model; content and the management of content; and facilities.

Sangoni says the inclusion of connectivity as part of the tender explains the ballooning of the tender value from just under R1 billion to its current R2 billion.

She says previous school connectivity agreements with the likes of Sentech have fallen through and this component was therefore added to the scope of the project.

This scope now entails connecting all schools to the GautengOnline initiative by 1 April 2009, ensuring Internet connectivity and e-mail access, building the necessary infrastructure and facilities for the computer laboratories, and maintaining the delivery of content via those labs.

Regular technology updates also have to take place with stolen computers begin replaced and adequate security measures have to be introduced at the relevant schools. Funding of the programme is also the responsibility of the tender winner.

Sangoni says the project as a whole will remain the responsibility of the GSSC, but it has been decided to move a number of related projects, such as an intact connectivity agreement with iBurst, over to SMMT Online.

The project will therefore be managed centrally and SMMT Online will be held responsible for all related tenders and service providers` actions.

The question of shareholding

Questions have also been raised about the fact that one man has significant shareholding in thee of the companies that make up the winning consortium for the GSSC`s GautengOnline tender.

The consortium, SMMT Online and is made up of SMM Telematics, Hawkstone Marketing, Sifikile, Self Empowerment International, Beget Holdings, Tebfin, Enlightened Security, and Vimba Security.

Tebogo Mogashoa is the CEO of SMM Telematics, as well as the CEO and sole owner of Tebfin, with both companies forming part of the winning consortium. In addition, he is a non-executive director and acting chairman of the board of JSE-listed Beget, a third beneficiary, whose BEE partner is SMM Telematics.

On its Web site, Beget describes Mogashoa as "well connected" and having managed large projects with a combined capital expenditure of R250 million for Eskom`s national electrification programme.

Mogashoa could not be reached for comment. Mike Silber of Michalson Attorneys says the same person`s name appearing repeatedly as a stakeholder in the tender consortium "certainly raises eyebrows".

"This would have had to receive attention during the tender evaluation," says Silber. "It certainly creates the impression that there is something funny going on."

However, he says it may well be that the tender board evaluated the consortium`s shareholding and found nothing wrong with it.

Sangoni is adamant that "there is no law prohibiting any individual to be a director in more than one company".

She says, "The rules that govern procurement processes permit that companies may submit joint venture bids. We were looking for a holistic solution and this consortium offered us that kind of end-to-end solution."

Sangoni says in deciding on SMMT Online as the winning bidder, "SMMT was able to prove their solution to be functionally superior to the other bids in a practical environment".

Who is SMMT?

The ownership and directors of all the companies in the SMMT Online consortium could not be determined at the time of publication. However, one company, Sifikile, has a 30% stake in Siemens Business Solutions and was party to a R1.25 billion department of labour contract awarded to the Siemens business unit in 2002. Sifikile is 50% owned by Tokyo Sexwale`s Mvelaphanda group.

Self Empowerment International, another beneficiary, has a 10% stake in new Lotto operator Gidani through holding company Nozala investments. Finally, Ernst & Young`s best emerging entrepreneur of the year Fulton Ramaphakela`s Vimba Security rounds of the group that makes up SMMT Online.

The other bidders for the Gauteng Online tender were Cascade Avenue trading, Waymark Infotech, Countrywide Tracking, Telkom, Sahara Systems, iBurst, Pinnacle Technology Holdings, and Michelangelo Technology, which entered a late bid.

In the dog box again

This is not the first time that allegations of impropriety have been leveled against the GSSC.

In 2005, criminal investigations were launched into the IT company that held the sole software and services contract for the GSSC, following a forensic audit into the company, Capstone 518.

Capstone apparently received R52 million worth of business from the GSSC during the time that its 50% shareholder, Mike Roussos, was also the CEO of the GSSC.

Gauteng MEC Paul Mashatile, under whose jurisdiction the GSSC falls, was tainted by allegations of nepotism after a major IT company hired his daughter at the time it was - ultimately successfully - tendering for a multimillion-rand tender at the GSSC.

In 2006 it came to light that the GSSC lost tens of millions of rands of government funds through salary payments to "ghost" workers and last year the Democratic Alliance questioned whether a two-week systems failure at the GSSC due to a virus should rather be linked to corrupt activities at the shared services centre.

The crash saw the GSSC having to entirely rebuild its IT infrastructure for the 80 000 to 100 000 PCs that run on its network. The GSSC is responsible for processing the payroll of the entire Gauteng government staff contingent, which meant that the crash jeopardised the salary payments of about 120 000 government employees.

The GSSC is also infamous for being the driver of the new province-wide driver`s licence booking system that regularly suffers massive backlogs.

At the time that the controversial electronic National Traffic Information System (eNatis) booking system was introduced in the province, the GSSC managed to create a backlog of 37 000 licence bookings. At the time the centre suffered two weeks of down time due to a virus last year, it was handling 11 000 bookings a day, putting the potential backlog created at a massive 110 000.

At this stage, Sangoni says there is a 20 000-strong backlog in licence bookings, with the majority relating to heavy vehicles, and 13 587 driver`s licence bookings "in the pipeline".

GautengOnline`s faltering start

GautengOnline was initiated in 2001 by Gauteng premier Mbhazima Shilowa, through the Department of Education. The project suffered many delays and setbacks, and in March 2005, an additional R100 million was allocated to fast track Gauteng Online; in addition to the original R500 million already allocated for the whole project. At that time, the project also saw an extension to its deadline to 2006. The deadline was later moved to 2007. In 2007, Paul Mashatile, the MEC for finance and economic affairs in Gauteng, announced in his budget speech that the project would fall under the GSSC. He added that an additional R200 million would be allocated for its completion.

Did you know?

The GSSC then invited tenders for the project on 31 August last year and awarded the tender on 18 December.The GSSC is an internal support body for Gauteng`s 11 departments, providing back-office support in the areas of finance, human resources, procurement, and technology support services, and falls under the jurisdiction of the finance and economic affairs MEC Paul Mashatile.